Dear Shareholder,

I do not have to reiterate that we have all been through a tremendously challenging year. The global pandemic added to a string of woes for our country, the effects of which will be felt well into 2021. At Sunshine Holdings, we see these as temporary setbacks and we remain bullish on the future of Sri Lanka. That is why we made some of the most significant investments in our history in FY 2020/21, laying the foundation for the future of our Company and aiming towards where we believe the country is headed.

The country rapidly responded to the coronavirus pandemic as it gripped the world and successfully contained the first wave. The lockdown and successive waves unfortunately took a toll on the country’s economy, which receded a – 3.6%. The Government undertook a variety of measures to provide relief, including easing monetary policy and introducing debt moratoriums for businesses and individuals affected by the pandemic. Imports were restricted to counter the impact of the reduced exports and financial inflows, which helped to improve the country’s trade balance. However, foreign reserves fell to their lowest point in 11 years in February 2021 and the exchange rate depreciated by 7.5% in the first quarter of 2021. This currency depreciation will bear a significant impact on the country and businesses reliant on imports, including ours, going forward.

Sunshine Holdings has always strived to create value through sustainable means. The diversification of our portfolio and operations has been key to this and we looked to expand our presence in sectors essential to the nation and our customers.

With the rebranding of Watawala Tea Ceylon Ltd. to Sunshine Consumer Lanka Ltd., we have made clear our new strategic direction to grow beyond tea and step into the Fast-Moving Consumer Goods (FMCG) sector. Our acquisition of Daintee Limited in August 2020 was a critical step towards this new direction and today, we have the leading tea brands with Watawala, Zesta, and Ran Kahata, and the leading sweets brands in the confectionery segment with Daintee and Milady.

The other significant move we made towards diversifying our portfolio and operations was the strategic merger of our healthcare business with the healthcare division of Akbar Brothers. This merger has led to the creation of the nation’s first fully integrated healthcare company, with Akbar Pharmaceuticals, Lina Manufacturing, and Lina Spiro operating in the research and development and manufacturing segments, and Sunshine Healthcare Lanka and Healthguard Pharmacy operating in the healthcare supply chain, importation, distribution, and retail segments. The combined entities will greatly expand the pharmaceutical capabilities and capacity of the nation and open up exciting possibilities for the Company, as health and wellness grow increasingly important to consumers in the wake of the pandemic.

We continued to invest in our people and in technology to empower our people and enable further growth for our businesses. We continue to leverage our existing strengths to create value in new and meaningful ways, such as with the launch of Healthguard Infinity, our new Distribution-as-a-Service model and the first of its kind in the healthcare sector of Sri Lanka. The combination of our stringent pharmaceutical supply chain and cutting-edge technologies such as Artificial Intelligence and cloud analytics will enable us to deliver valuable insights to our partners and greatly benefit customers and the local healthcare sector.

As the world and our nation continues to emerge from the health crisis, it remains difficult to assess how the changing situation will affect outcomes for the remainder of the year. We at Sunshine Holdings believe that despite the challenges, the future remains bright and promising for Sri Lanka. The investments and moves we have made in this past year are a testament to that belief. Our strategies have always been crafted and executed with the long term in mind and we feel that we are perfectly poised to capitalise on evolving consumer trends and address the needs of the nation.

In closing, I would like to express how grateful I am to our Board of Directors for their steady guiding hand and their invaluable support. I thank our many stakeholders, including our investors, business partners, employees, and customers for their trust in us, in our products and services, and ask for your continued trust and patronage. While we have made significant moves to lay the foundation for the future of Sunshine Holdings in FY 2020/21 to deliver sustainable value to our stakeholders, this continues to be an ongoing process and FY 2021/22 will be no different. We look forward to what the future holds for our Company.

M Shaikh
Chairman

25 May 2021